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Donnerstag, 28. Juli 2016

Siobhan Morden, the head of Latin American fixed-income strategy at Nomura Holdings Inc., estimates that PDVSA would have to offer around $1.8 for every $1 of the April 2017 bonds it refinances because investors who think the notes will get paid will want to be compensated for the potential 35 percent price increase over the next nine months.

By Sebastian Boyd (Bloomberg) -- Venezuela’s cash-strapped oil company is fueling speculation it may strike a deal to get some breathing room on $8.1 billion of debt. But the move may ultimately prove costly while doing little to bolster the company’s long-term financial health. Oil Minister Eulogio Del Pino, who is also president of Petroleos de Venezuela SA, said the company is in advanced talks to refinance debt due in the next 18 months, according to local media reports on Wednesday <http://airmail.calendar/2016-08-03%2012:00:00%20CEST>. The news caused its benchmark bonds due in November 2017 to jump 3.4 percent. But such a deal means PDVSA, as the company is known, would need to offer bondholders securities that boost the net present value of their investment so that move isn’t deemed a default. That means paying a huge premium to persuade investors to swap their notes. Based on the 35-cent price of PDVSA’s debt due in 2024, the company would have to sell sell almost $17 billion of bonds just to raise the $5.9 billion needed to pay the current market value on bonds maturing in 2016 and 2017. That would cause its total debt to soar by $11 billion -- twice the net income the company generated last year. The increased debt load would also come at a time when Venezuela’s economy is reeling from a plunge in oil prices, soaring inflation and increasing political and social unrest. “It would be quite expensive and at the end of the day it wouldn’t solve the problem,” said Michael Ganske, head of emerging markets at Axa Investment Managers in London. “It’s just moving the maturity because in the short term it is very difficult to service the debt. They’re kicking it down the road. It’s still not sustainable, the economy and society are in such bad shape that the economy is literally imploding.” Del Pino said Tuesday <http://airmail.calendar/2016-08-02%2012:00:00%20CEST> he plans to announce a swap “at the appropriate time,” according to Petroguia, a Caracas-based website. A spokesman for Del Pino said he couldn’t confirm Petroguia’s information on the swap offer, and said he would contact the minister on the matter. Bankers at Rothschild & Co. last week held a conference call with investors of PDVSA debt to discuss a plan to swap bonds due in October this year as well as the 2017 debt for a basket of debt due in 2024 and beyond, according to people with knowledge of the matter. PDVSA has $4.4 billion of dollar-debt payments still to make this year and $7.5 billion next year, according to data compiled by Bloomberg. With earnings before items of $9.3 billion in 2015, the company is anxious to push some of that debt burden into the future, at which point the price of oil may have risen enough that it can make payments without difficulty. “This is one of the ways in which a credit event in 2016 can be avoided, and it puts the possibility of surviving 2017 on the table,” said Daniel Urdaneta, a strategist at Knossos Asset Management in Caracas. It’s “not a certainty though.” Siobhan Morden, the head of Latin American fixed-income strategy at Nomura Holdings Inc., estimates that PDVSA would have to offer around $1.8 for every $1 of the April 2017 bonds it refinances because investors who think the notes will get paid will want to be compensated for the potential 35 percent price increase over the next nine months. “The debt stock will grow no matter what,” she said from New York. The bond-swap speculation may itself make the deal more costly. “If you want to tender, the bonds will go up and it will just get more expensive for PDVSA to do,” Ganske said.Von meinem iPhone gesendet

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Some hedge funds are returning to the Greek government bond market less than a year after the country was bailed out for the third time, as the hunt for yield intensifies in a low-rate environment.

The debt-laden nation this week eased capital controls as it continues to make progress on bailout-mandated reforms.

This steady progress has been highlighted by some investors as a buying opportunity, particularly against the backdrop of negative yields in a large portion of the core eurozone sovereign market.

Even peripheral sovereign bonds are trading at record low yields.

“Greece is on a slow path to recovery. They have undertaken a lot of reforms, including on pensions, on tax collection and the new ambitious constitutional reform,” said Alberto Gallo, head of macro strategies at hedge fund Algebris, who recommends a Greece versus Portugal trade.

“They should also have pretty good tax revenues in the summer and we are looking at an inclusion in the ECB QE program by year-end,” he added.

Some hedge funds are returning to the Greek government bond market less than a year after the country was bailed out for the third time, as the hunt for yield intensifies in a low-rate environment.

The debt-laden nation this week eased capital controls as it continues to make progress on bailout-mandated reforms.

This steady progress has been highlighted by some investors as a buying opportunity, particularly against the backdrop of negative yields in a large portion of the core eurozone sovereign market.

Even peripheral sovereign bonds are trading at record low yields.

“Greece is on a slow path to recovery. They have undertaken a lot of reforms, including on pensions, on tax collection and the new ambitious constitutional reform,” said Alberto Gallo, head of macro strategies at hedge fund Algebris, who recommends a Greece versus Portugal trade.

“They should also have pretty good tax revenues in the summer and we are looking at an inclusion in the ECB QE program by year-end,” he added.